Through Flexible Mechanisms in the Kyoto Protocol, countries and private companies are able to buy credits for carbon emissions reduced in other countries to compensate for the carbon emissions they are not reducing themselves. The Clean Development Mechanism (“CDM”) encourages developed countries and private companies to invest in emission reduction projects in developing countries in exchange for carbon credits that will be counted as a reduction in the funder’s overall carbon emissions output.
Moshman, Rachael. "The Carbon Emissions Market Bottoms Out in One South African Community." Sustainable Development Law & Policy, Spring 2005, 35-36.